Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB Form G-45 To Collect Additional Data About the Transactional Fees Primarily Assessed by Programs Established To Implement the ABLE Act, 59148-59151 [2017-26909]

Download as PDF 59148 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Burden on Competition and Barriers to Entry (12) Commenters’ views as to whether the allocation of 75% of CAT costs to Industry Members (other than Execution Venue ATSs) imposes any burdens on competition to Industry Members, including views on what baseline competitive landscape the Commission should consider when analyzing the proposed allocation of CAT costs. (13) Commenters’ views on the burdens on competition, including the relevant markets and services and the impact of such burdens on the baseline competitive landscape in those relevant markets and services. (14) Commenters’ views on any potential burdens imposed by the fees on competition between and among CAT Reporters, including views on which baseline markets and services the fees could have competitive effects on and whether the fees are designed to minimize such effects. (15) Commenters’ general views on the impact of the proposed fees on economies of scale and barriers to entry. (16) Commenters’ views on the baseline economies of scale and barriers to entry for Industry Members and Execution Venues and the relevant markets and services over which these economies of scale and barriers to entry exist. (17) Commenters’ views as to whether a tiered fee structure necessarily results in less active tiers paying more per unit than those in more active tiers, thus creating economies of scale, with supporting information if possible. (18) Commenters’ views as to how the level of the fees for the least active tiers would or would not affect barriers to entry. (19) Commenters’ views on whether the difference between the cost per unit (messages or market share) in less active tiers compared to the cost per unit in more active tiers creates regulatory economies of scale that favor larger competitors and, if so: (a) How those economies of scale compare to operational economies of scale; and (b) Whether those economies of scale reduce or increase the current advantages enjoyed by larger competitors or otherwise alter the competitive landscape. (20) Commenters’ views on whether the fees could affect competition between and among national securities exchanges and FINRA, in light of the fact that implementation of the fees does not require the unanimous consent of all such entities, and, specifically: VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 (a) Whether any of the national securities exchanges or FINRA are disadvantaged by the fees; and (b) If so, whether any such disadvantages would be of a magnitude that would alter the competitive landscape. (21) Commenters’ views on any potential burden imposed by the fees on competitive quoting and other liquidity provision in the market, including, specifically: (a) Commenters’ views on the kinds of disincentives that discourage liquidity provision and/or disincentives that the Commission should consider in its analysis; (b) Commenters’ views as to whether the fees could disincentivize the provision of liquidity; and (c) Commenters’ views as to whether the fees limit any disincentives to provide liquidity. (22) Commenters’ views as to whether the amendment adequately responds to and/or addresses comments received on related filings. Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEMKT–2017–26 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEMKT–2017–26. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for PO 00000 Frm 00357 Fmt 4703 Sfmt 4703 inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSEMKT–2017–26 and should be submitted on or before January 4, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.101 Robert W. Errett, Deputy Secretary. [FR Doc. 2017–27022 Filed 12–13–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82238; File No. SR–MSRB– 2017–08] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB Form G–45 To Collect Additional Data About the Transactional Fees Primarily Assessed by Programs Established To Implement the ABLE Act December 8, 2017. I. Introduction On October 13, 2017, the Municipal Securities Rulemaking Board (the ‘‘MSRB’’ or ‘‘Board’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to amend MSRB Form G–45 under MSRB Rule G–45, on reporting of information on municipal fund securities,3 to collect additional data about the transactional fees primarily assessed by programs established to implement the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ‘‘ABLE Act’’ and an ‘‘ABLE program’’) (the ‘‘proposed rule change’’).4 The proposed rule change 101 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Form G–45 is an electronic form on which submissions of the information required by Rule G–45 are made to the MSRB. 4 The ABLE Act was enacted on December 19, 2014 as part of The Tax Increase Prevention Act of 2014 (Pub. L. 113–295). 1 15 E:\FR\FM\14DEN1.SGM 14DEN1 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices was published for comment in the Federal Register on October 27, 2017.5 The Commission received one comment letter on the proposed rule change.6 On December 1, 2017, the MSRB responded to the comments received by the Commission.7 sradovich on DSK3GMQ082PROD with NOTICES II. Description of Proposed Rule Change In the Notice of Filing, the MSRB stated that the proposed rule change would amend Form G–45 to collect additional information relating to fees and expenses to help ensure that the MSRB continues to receive comprehensive information regarding ABLE programs and 529 college savings plans.8 The MSRB stated that this data would enhance the MSRB’s understanding of the markets for ABLE programs and 529 college savings plans, including the differences among such programs or plans.9 Further, the MSRB stated that the additional fee and expense information would assist the MSRB in fulfilling its investor protection mission.10 The MSRB also stated that the information about fees and expenses would continue to be submitted in a format that is consistent with the disclosure principles of the College Savings Plan Network (‘‘CSPN’’), an affiliate of the National Association of State Treasurers, which, the MSRB added, commenters on previous MSRB rulemaking proposals relating to MSRB Form G–45 have stated is the industry norm.11 As further described by the MSRB in the Notice of Filing, under the proposed rule change, an underwriter to an ABLE program or a 529 college savings plan would be required to submit data on Form G–45 about the following additional fees and expenses, as applicable: • account opening fee; • investment administration fee; • change in account owner fee; • cancellation/withdrawal fee; • change in investment option/ transfer fee; 5 Securities Exchange Act Release No. 81921 (October 23, 2017) (the ‘‘Notice of Filing’’), 82 FR 49908 (October 27, 2017). 6 See Letter to Secretary, Commission, from Leslie Norwood, Managing Director and Associate General Counsel, and Bernard Canepa, Vice President and Assistant General Counsel, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated November 17, 2017 (the ‘‘SIFMA Letter’’). 7 See Letter to Secretary, Commission, from Pamela K. Ellis, Associate General Counsel, MSRB, dated December 1, 2017 (the ‘‘MSRB Response Letter’’), available at https://www.sec.gov/ comments/sr-msrb-2017-08/msrb201708-2743045161576.pdf . 8 See Notice of Filing. 9 Id. 10 Id. 11 Id. VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 • rollover fee; • returned excess aggregate contributions fee; • rejected ACH or EFT fee; • overnight delivery fee; • in-network ATM fee; • out-of-network ATM fee; • ATM mini statement fee; • international POS/ATM transaction fee; • foreign transaction fee; • overdraft fee; • copy of check or statement fee (per request); • copy of check images mailed with monthly statement fee; • check fee (i.e., fee for blank checks); • returned check fee; • checking account option fee; • re-issue of disbursement check fee; • stop payment fee; • debit card fee; • debit card replacement fee; • outgoing wire fee; • expedited debit card rush delivery fee; • paper fee; and • miscellaneous fee (to address any miscellaneous transactional fee that is not otherwise specified on Form G– 45).12 In addition, under the proposed rule change, the MSRB stated that it would collect data about any variance in the annual account maintenance fee due to the residency of the account owner.13 The MSRB also stated that the proposed rule would apply to underwriters to ABLE programs as well as to underwriters to 529 college savings plans.14 The MSRB, however, stated that it anticipates that most of the data that would be collected by the proposed rule change would relate to ABLE programs.15 The MSRB also noted that it believes that 529 college savings plans generally do not assess the fees and charges that are the subject of this proposed rule change.16 The MSRB requested in the Notice of Filing that the proposed rule change be approved with an effective date of June 30, 2018.17 III. Summary of Comments Received and MSRB’s Responses to Comments As noted previously, the Commission received one comment letter on the proposed rule change, as well as the MSRB Response Letter. The commenter, SIFMA, stated that it was ‘‘supportive of the MSRB’s efforts to fully understand the ABLE programs and 529 college savings plans market and fulfill its mission’’ but believed that municipal securities dealers who underwrite ABLE programs and 529 college savings plans ‘‘should only be required to submit the information required by Form G–45 to the extent it is within their possession, custody, or control’’.18 SIFMA also stated that the MSRB should be mindful of the possibility that additional regulatory requirements such as the proposed rule change could increase costs to investors in dealer-sold 529 college savings plans and ABLE programs versus direct-sold programs that are not regulated by the MSRB.19 The MSRB stated that it believes the proposed rule change is consistent with its statutory mandate and has responded to the comments, as discussed below.20 1. Submission of Information Within Custody of Dealer SIFMA stated that some of the information about fees that underwriters would be required to submit on MSRB Form G–45, under the proposed rule change, may be contained in ABLE program or 529 college savings plan disclosure documents and suggested that those underwriters could provide hyperlinks to those documents to the MSRB.21 The MSRB responded by stating that even if some of the information required to be submitted on MSRB Form G–45 were contained in those ABLE program or 529 college savings plan disclosure documents, that the information would not be published in a uniform electronic format that would allow for the MSRB’s efficient analysis or comparison of such information.22 The MSRB noted that, at this time, there is no requirement that state issuers prepare those disclosure documents in a uniform format and, unlike for 529 college savings plans, there are not even voluntary disclosure principles for state issuers in the preparation of their disclosure documents that are applicable to ABLE programs.23 As result, the MSRB stated, it is even more likely that the information in the ABLE program disclosure documents would not be presented in a uniform format that would allow the MSRB to readily analyze and compare ABLE programs.24 In addition, the MSRB stated that referencing the ABLE program or 529 18 See 12 Id. 13 Id. 20 See 14 Id. SIFMA Letter. 19 Id. 21 See MSRB Response Letter. SIFMA Letter. 22 See MSRB Response Letter. 23 Id. 24 Id. 15 Id. 16 Id. 17 Id. PO 00000 Frm 00358 Fmt 4703 Sfmt 4703 59149 E:\FR\FM\14DEN1.SGM 14DEN1 59150 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES college savings plan disclosure documents would not meet the MSRB’s regulatory need because the data provided to the MSRB must be in a uniform electronic format that can be aggregated and analyzed.25 The MSRB acknowledged that the proposed rule change would result in some up-front costs to underwriters due to technical changes to underwriters’ reporting systems, but the MSRB stated that those costs should mostly be one-time only costs and that the cumulative benefits of receiving data in a uniform electronic format should exceed the upfront costs over time.26 2. Applicability of Proposed Rule Change to Advisor-Sold and Direct-Sold ABLE Programs and 529 College Savings Plans SIFMA suggested that the duty to submit information about the fees assessed by ABLE programs and 529 college savings plans on MSRB Form G– 45 would create an undue burden because, in SIFMA’s view, the MSRB’s jurisdiction is limited to underwriters to dealer-sold ABLE programs or 529 college savings plans.27 The MSRB responded by stating that such an undue burden on competition would not exist because the MSRB believes it has jurisdiction over all underwriters of ABLE programs and 529 college savings plans.28 The MSRB stated that it has jurisdiction over underwriters to all 529 college savings plans, regardless of the marketing channel through which such plans are sold (whether sold with the advice of a dealer, i.e., ‘‘advisor-sold,’’ or without the advice of a dealer, i.e., ‘‘direct-sold’’), and this view has equal application to similar ABLE programs.29 The MSRB also stated that it has previously discussed the application of Rule G–45 to dealers, and in doing so has said that the activities of an entity may cause that entity to be within the definition of dealer and/or underwriter set forth in the Act or rules thereunder and thus subject to MSRB Rule G–45.30 The MSRB stated that, for example, the activities of a program manager to an ABLE program or 529 college savings plan, or its affiliates or contractors, could include direct contact with investors through the development and distribution of ABLE program or 529 college savings plan advertising sales literature, or maintaining ABLE program or 529 college savings plan websites, 25 Id. 26 Id. 27 See 28 See SIFMA Letter. MSRB Response Letter. including processing enrollment funds.31 The MSRB stated that those activities could, depending on the facts and circumstances, cause one or more of those entities to be underwriters under Rule G–45.32 The MSRB also noted that it believed the Commission has agreed with the MSRB that each entity must make its own determination about whether its activity would qualify as ‘‘underwriting’’ activity as that term is defined in SEC Rule 15c2–12(f)(8) under the Act.33 In addition, the MSRB stated that, beginning in 2015, the MSRB has received data from underwriters to 529 college savings plans under Rule G– 45.34 The MSRB stated that it has every reason to believe that there is widespread compliance by those underwriters with their reporting obligations under Rule G–45.35 Consequently, the MSRB stated, it does not believe that the requirement to submit fee information, as would be required under the proposed rule change, on MSRB Form G–45 would unduly burden competition between underwriters to advisor-sold ABLE programs or 529 college savings plans versus underwriters to direct-sold ABLE programs or 529 college savings plans.36 IV. Discussion and Commission Findings The Commission has carefully considered the proposed rule change, the comment letter received, and the MSRB Response Letter. The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. In particular, the proposed rule change is consistent with Sections 15B(b)(2)(C) of the Act.41 Section 15B(b)(2)(C) of the Act states that the MSRB’s rules shall be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, and, in general, to 3. Underwriter Reporting Obligation protect investors, municipal entities, obligated persons, and the public SIFMA stated that it believed dealers 42 that underwrite ABLE programs and 529 interest. The Commission believes the proposed rule change is consistent with college savings plans should only be required to submit information required Section 15B(b)(2)(C) and necessary and appropriate to help the MSRB receive by MSRB Form G–45 to the extent that complete and reliable information about such information is within their ABLE programs and 529 college savings 37 The possession, custody and control. plans which it can use to monitor such MSRB stated that, under the proposed programs and plans and detect potential rule change, and consistent with the MSRB’s previous position on this issue, investor harm. The Commission believes that, for that data set to be an underwriter to an ABLE program or complete and reliable, such data should 529 college savings plan would not be include the data about the fees and required to submit information on expenses associated with an investment MSRB Form G–45 that the underwriter neither possesses nor has the legal right in an ABLE program or a 529 college savings plan that are included in the to obtain.38 The MSRB also noted that proposed rule change. In addition, the the legal right to obtain the information Commission believes the proposed rule for purposes of the proposed rule change is necessary for the MSRB to change is not affected by a voluntary gather relevant data required to ensure relinquishment, by contract or otherwise, of such right.39 Therefore, the the MSRB’s regulatory scheme is sufficient and/or to determine whether MSRB stated, an underwriter may additional rulemaking is necessary to designate an affiliate or contractor to protect investors and the public interest. perform activities in the underwriter’s The Commission believes that the stead in connection with the proposed rule change would facilitate underwriting, but that the underwriter the MSRB’s ability to better analyze the market for ABLE programs and 529 31 Id. college savings plans as well as improve 32 Id. the MSRB’s ability to evaluate trends 33 Id. and differences among ABLE programs 34 Id. 35 Id. and 529 college savings plans. Further, 36 Id. 37 See 29 Id. 38 See 30 Id. SIFMA Letter. MSRB Response Letter. 39 Id. VerDate Sep<11>2014 21:28 Dec 13, 2017 would be properly viewed as having the legal right to obtain all information.40 Jkt 244001 PO 00000 Frm 00359 40 Id. 41 15 42 15 Fmt 4703 Sfmt 4703 E:\FR\FM\14DEN1.SGM U.S.C. 78o–4(b)(2)(C). U.S.C. 78o–4(b)(2)(C). 14DEN1 Federal Register / Vol. 82, No. 239 / Thursday, December 14, 2017 / Notices the Commission believes that the MSRB, as well as other financial regulators charged with enforcing the MSRB’s rules, use (or will use) the information submitted on MSRB Form G–45 to enhance their understanding of, and ability to monitor, ABLE programs and 529 college savings plans. The Commission believes that the MSRB or other regulators could use the information submitted on MSRB Form G–45 to, among other things, determine if the disclosure documents or marketing materials prepared or reviewed by underwriters are consistent with the data submitted to the MSRB for regulatory purposes. In approving the proposed rule change, the Commission also has considered the impact of the proposed rule change on efficiency, competition, and capital formation.43 The Commission does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The additional data that the proposed rule change would collect is understood by the Commission to be readily available and known to the underwriters of ABLE programs and 529 college savings plans. Additionally, the Commission understands that these underwriters are already required to submit certain information to the MSRB on MSRB Form G–45 on a semi-annual basis. Also, the Commission believes that the additional information required to be submitted by the proposed rule change would be submitted on an equal and non-discriminatory basis, and the requirement would apply equally to all dealers that serve as underwriters to ABLE programs and/or 529 college savings plans. Furthermore, the Commission believes that the potential burdens created by the proposed rule change are to be likely outweighed by the benefits. For the reasons noted above, the Commission believes that the proposed rule change is consistent with the Act. sradovich on DSK3GMQ082PROD with NOTICES V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,44 that the proposed rule change (SR–MSRB–2017– 08) be, and hereby is, approved. For the Commission, pursuant to delegated authority.45 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–26909 Filed 12–13–17; 8:45 am] BILLING CODE 8011–01–P 43 15 U.S.C. 78c(f). U.S.C. 78s(b)(2). 45 17 CFR 200.30–3(a)(12). 44 15 VerDate Sep<11>2014 21:28 Dec 13, 2017 Jkt 244001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82251; File No. SR–CHX– 2017–08] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing of Amendment No. 1 to a Proposed Rule Change To Amend the Schedule of Fees and Assessments To Adopt a Fee Schedule To Establish Fees for Industry Members Related to the National Market System Plan Governing the Consolidated Audit Trail December 8, 2017. On May 3, 2017, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt a fee schedule to establish the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’). The proposed rule change was published in the Federal Register for comment on May 22, 2017.3 The Commission received seven comment letters on the proposed rule change,4 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 80691 (May 16, 2017), 82 FR 23344 (May 22, 2017) (‘‘Original Proposal’’). 4 Since the CAT NMS Plan Participants’ proposed rule changes to adopt fees to be charged to Industry Members to fund the consolidated audit trail are substantively identical, the Commission is considering all comments received on the proposed rule changes regardless of the comment file to which they were submitted. See text accompanying notes 13–16 infra, for a list of the CAT NMS Plan Participants. See Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association, to Brent J. Fields, Secretary, Commission (dated June 6, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/ batsbzx201738-1788188-153228.pdf; Letter from Patricia L. Cerny and Steven O’Malley, Compliance Consultants, to Brent J. Fields, Secretary, Commission (dated June 12, 2017), available at: https://www.sec.gov/comments/sr-cboe-2017-040/ cboe2017040-1799253-153675.pdf; Letter from Daniel Zinn, General Counsel, OTC Markets Group Inc., to Eduardo A. Aleman, Assistant Secretary, Commission (dated June 13, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-1801717-153703.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, Commission (dated June 22, 2017), available at: https:// www.sec.gov/comments/sr-cboe-2017-040/ cboe2017040-1819670-154195.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated June 23, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-1822454-154283.pdf; and Letter from Suzanne H. Shatto, Investor, to Commission (dated June 27, 2017), available at: https://www.sec.gov/ 2 17 PO 00000 Frm 00360 Fmt 4703 Sfmt 4703 59151 and a response to comments from the Participants.5 On June 30, 2017, the Commission temporarily suspended and initiated proceedings to determine whether to approve or disapprove the proposed rule change.6 The Commission thereafter received seven comment letters,7 and a response to comments from the CAT NMS Plan Participants.8 On November 9, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, as described in Items I and II below, which Items have been prepared by the Exchange.9 On November 9, 2017, the Commission extended the time period within which to approve the proposed rule change or disapprove the proposed rule change to comments/sr-batsedgx-2017–22/batsedgx201722154443.pdf. The Commission also received a comment letter which is not pertinent to these proposed rule changes. See Letter from Christina Crouch, Smart Ltd., to Brent J. Fields, Secretary, Commission (dated June 5, 2017), available at: https://www.sec.gov/comments/sr-batsbzx-2017-38/ batsbzx201738-1785545-153152.htm. 5 See Letter from CAT NMS Plan Participants to Brent J. Fields, Secretary, Commission (dated June 29, 2017), available at: https://www.sec.gov/ comments/sr-batsbyx-2017-11/batsbyx2017111832632-154584.pdf. 6 See Securities Exchange Act Release No. 81067 (June 30, 2017), 82 FR 31656 (July 7, 2017). 7 See Letter from W. Hardy Callcott, Partner, Sidley Austin LLP, to Brent J. Fields, Secretary, Commission (dated July 27, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2148338-157737.pdf; Letter from Kevin Coleman, General Counsel and Chief Compliance Officer, Belvedere Trading LLC, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/ comments/sr-batsbyx-2017-11/batsbyx2017112148360-157740.pdf; Letter from Joanna Mallers, Secretary, FIA Principal Traders Group, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/srbatsbyx-2017-11/batsbyx201711-2151228157745.pdf; Letter from Theodore R. Lazo, Managing Director and Associate General Counsel, SIFMA, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https:// www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2150977-157744.pdf; Letter from Stuart J. Kaswell, Executive Vice President and Managing Director, General Counsel, Managed Funds Association, to Brent J. Fields, Secretary, Commission (dated July 28, 2017), available at: https://www.sec.gov/comments/sr-batsbyx-2017-11/ batsbyx201711-2150818-157743.pdf; Letter from John Kinahan, Chief Executive Officer, Group One Trading, L.P., to Brent J. Fields, Secretary, Commission (dated August 10, 2017), available at: https://www.sec.gov/comments/sr-finra-2017-011/ finra2017011-2214568-160619.pdf; Letter from Joseph Molluso, Executive Vice President and CFO, Virtu Financial, to Brent J. Fields, Commission (dated August 18, 2017), available at: https:// www.sec.gov/comments/sr-finra-2017-011/ finra2017011-2238648-160830.pdf. 8 See Letter from Michael Simon, Chair, CAT NMS Plan Operating Committee, to Brent J. Fields, Commission, Secretary (dated November 2, 2017), available at https://www.sec.gov/comments/srbatsbyx-2017-11/batsbyx201711-2674608161412.pdf. 9 Amendment No. 1 to the proposed rule change replaces and supersedes the Original Proposal in its entirety. E:\FR\FM\14DEN1.SGM 14DEN1

Agencies

[Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)]
[Notices]
[Pages 59148-59151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26909]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82238; File No. SR-MSRB-2017-08]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of a Proposed Rule Change To Amend MSRB 
Form G-45 To Collect Additional Data About the Transactional Fees 
Primarily Assessed by Programs Established To Implement the ABLE Act

December 8, 2017.

I. Introduction

    On October 13, 2017, the Municipal Securities Rulemaking Board (the 
``MSRB'' or ``Board'') filed with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission''), pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change to amend MSRB Form G-45 
under MSRB Rule G-45, on reporting of information on municipal fund 
securities,\3\ to collect additional data about the transactional fees 
primarily assessed by programs established to implement the Stephen 
Beck, Jr., Achieving a Better Life Experience Act of 2014 (the ``ABLE 
Act'' and an ``ABLE program'') (the ``proposed rule change'').\4\ The 
proposed rule change

[[Page 59149]]

was published for comment in the Federal Register on October 27, 
2017.\5\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Form G-45 is an electronic form on which submissions of the 
information required by Rule G-45 are made to the MSRB.
    \4\ The ABLE Act was enacted on December 19, 2014 as part of The 
Tax Increase Prevention Act of 2014 (Pub. L. 113-295).
    \5\ Securities Exchange Act Release No. 81921 (October 23, 2017) 
(the ``Notice of Filing''), 82 FR 49908 (October 27, 2017).
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    The Commission received one comment letter on the proposed rule 
change.\6\ On December 1, 2017, the MSRB responded to the comments 
received by the Commission.\7\
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    \6\ See Letter to Secretary, Commission, from Leslie Norwood, 
Managing Director and Associate General Counsel, and Bernard Canepa, 
Vice President and Assistant General Counsel, Securities Industry 
and Financial Markets Association (``SIFMA''), dated November 17, 
2017 (the ``SIFMA Letter'').
    \7\ See Letter to Secretary, Commission, from Pamela K. Ellis, 
Associate General Counsel, MSRB, dated December 1, 2017 (the ``MSRB 
Response Letter''), available at https://www.sec.gov/comments/sr-msrb-2017-08/msrb201708-2743045-161576.pdf .
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II. Description of Proposed Rule Change

    In the Notice of Filing, the MSRB stated that the proposed rule 
change would amend Form G-45 to collect additional information relating 
to fees and expenses to help ensure that the MSRB continues to receive 
comprehensive information regarding ABLE programs and 529 college 
savings plans.\8\ The MSRB stated that this data would enhance the 
MSRB's understanding of the markets for ABLE programs and 529 college 
savings plans, including the differences among such programs or 
plans.\9\ Further, the MSRB stated that the additional fee and expense 
information would assist the MSRB in fulfilling its investor protection 
mission.\10\ The MSRB also stated that the information about fees and 
expenses would continue to be submitted in a format that is consistent 
with the disclosure principles of the College Savings Plan Network 
(``CSPN''), an affiliate of the National Association of State 
Treasurers, which, the MSRB added, commenters on previous MSRB 
rulemaking proposals relating to MSRB Form G-45 have stated is the 
industry norm.\11\
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    \8\ See Notice of Filing.
    \9\ Id.
    \10\ Id.
    \11\ Id.
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    As further described by the MSRB in the Notice of Filing, under the 
proposed rule change, an underwriter to an ABLE program or a 529 
college savings plan would be required to submit data on Form G-45 
about the following additional fees and expenses, as applicable:
     account opening fee;
     investment administration fee;
     change in account owner fee;
     cancellation/withdrawal fee;
     change in investment option/transfer fee;
     rollover fee;
     returned excess aggregate contributions fee;
     rejected ACH or EFT fee;
     overnight delivery fee;
     in-network ATM fee;
     out-of-network ATM fee;
     ATM mini statement fee;
     international POS/ATM transaction fee;
     foreign transaction fee;
     overdraft fee;
     copy of check or statement fee (per request);
     copy of check images mailed with monthly statement fee;
     check fee (i.e., fee for blank checks);
     returned check fee;
     checking account option fee;
     re-issue of disbursement check fee;
     stop payment fee;
     debit card fee;
     debit card replacement fee;
     outgoing wire fee;
     expedited debit card rush delivery fee;
     paper fee; and
     miscellaneous fee (to address any miscellaneous 
transactional fee that is not otherwise specified on Form G-45).\12\
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    \12\ Id.
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    In addition, under the proposed rule change, the MSRB stated that 
it would collect data about any variance in the annual account 
maintenance fee due to the residency of the account owner.\13\ The MSRB 
also stated that the proposed rule would apply to underwriters to ABLE 
programs as well as to underwriters to 529 college savings plans.\14\ 
The MSRB, however, stated that it anticipates that most of the data 
that would be collected by the proposed rule change would relate to 
ABLE programs.\15\ The MSRB also noted that it believes that 529 
college savings plans generally do not assess the fees and charges that 
are the subject of this proposed rule change.\16\
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    \13\ Id.
    \14\ Id.
    \15\ Id.
    \16\ Id.
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    The MSRB requested in the Notice of Filing that the proposed rule 
change be approved with an effective date of June 30, 2018.\17\
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    \17\ Id.
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III. Summary of Comments Received and MSRB's Responses to Comments

    As noted previously, the Commission received one comment letter on 
the proposed rule change, as well as the MSRB Response Letter. The 
commenter, SIFMA, stated that it was ``supportive of the MSRB's efforts 
to fully understand the ABLE programs and 529 college savings plans 
market and fulfill its mission'' but believed that municipal securities 
dealers who underwrite ABLE programs and 529 college savings plans 
``should only be required to submit the information required by Form G-
45 to the extent it is within their possession, custody, or 
control''.\18\ SIFMA also stated that the MSRB should be mindful of the 
possibility that additional regulatory requirements such as the 
proposed rule change could increase costs to investors in dealer-sold 
529 college savings plans and ABLE programs versus direct-sold programs 
that are not regulated by the MSRB.\19\ The MSRB stated that it 
believes the proposed rule change is consistent with its statutory 
mandate and has responded to the comments, as discussed below.\20\
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    \18\ See SIFMA Letter.
    \19\ Id.
    \20\ See MSRB Response Letter.
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1. Submission of Information Within Custody of Dealer

    SIFMA stated that some of the information about fees that 
underwriters would be required to submit on MSRB Form G-45, under the 
proposed rule change, may be contained in ABLE program or 529 college 
savings plan disclosure documents and suggested that those underwriters 
could provide hyperlinks to those documents to the MSRB.\21\ The MSRB 
responded by stating that even if some of the information required to 
be submitted on MSRB Form G-45 were contained in those ABLE program or 
529 college savings plan disclosure documents, that the information 
would not be published in a uniform electronic format that would allow 
for the MSRB's efficient analysis or comparison of such 
information.\22\ The MSRB noted that, at this time, there is no 
requirement that state issuers prepare those disclosure documents in a 
uniform format and, unlike for 529 college savings plans, there are not 
even voluntary disclosure principles for state issuers in the 
preparation of their disclosure documents that are applicable to ABLE 
programs.\23\ As result, the MSRB stated, it is even more likely that 
the information in the ABLE program disclosure documents would not be 
presented in a uniform format that would allow the MSRB to readily 
analyze and compare ABLE programs.\24\ In addition, the MSRB stated 
that referencing the ABLE program or 529

[[Page 59150]]

college savings plan disclosure documents would not meet the MSRB's 
regulatory need because the data provided to the MSRB must be in a 
uniform electronic format that can be aggregated and analyzed.\25\ The 
MSRB acknowledged that the proposed rule change would result in some 
up-front costs to underwriters due to technical changes to 
underwriters' reporting systems, but the MSRB stated that those costs 
should mostly be one-time only costs and that the cumulative benefits 
of receiving data in a uniform electronic format should exceed the 
upfront costs over time.\26\
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    \21\ See SIFMA Letter.
    \22\ See MSRB Response Letter.
    \23\ Id.
    \24\ Id.
    \25\ Id.
    \26\ Id.
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2. Applicability of Proposed Rule Change to Advisor-Sold and Direct-
Sold ABLE Programs and 529 College Savings Plans

    SIFMA suggested that the duty to submit information about the fees 
assessed by ABLE programs and 529 college savings plans on MSRB Form G-
45 would create an undue burden because, in SIFMA's view, the MSRB's 
jurisdiction is limited to underwriters to dealer-sold ABLE programs or 
529 college savings plans.\27\ The MSRB responded by stating that such 
an undue burden on competition would not exist because the MSRB 
believes it has jurisdiction over all underwriters of ABLE programs and 
529 college savings plans.\28\ The MSRB stated that it has jurisdiction 
over underwriters to all 529 college savings plans, regardless of the 
marketing channel through which such plans are sold (whether sold with 
the advice of a dealer, i.e., ``advisor-sold,'' or without the advice 
of a dealer, i.e., ``direct-sold''), and this view has equal 
application to similar ABLE programs.\29\ The MSRB also stated that it 
has previously discussed the application of Rule G-45 to dealers, and 
in doing so has said that the activities of an entity may cause that 
entity to be within the definition of dealer and/or underwriter set 
forth in the Act or rules thereunder and thus subject to MSRB Rule G-
45.\30\ The MSRB stated that, for example, the activities of a program 
manager to an ABLE program or 529 college savings plan, or its 
affiliates or contractors, could include direct contact with investors 
through the development and distribution of ABLE program or 529 college 
savings plan advertising sales literature, or maintaining ABLE program 
or 529 college savings plan websites, including processing enrollment 
funds.\31\ The MSRB stated that those activities could, depending on 
the facts and circumstances, cause one or more of those entities to be 
underwriters under Rule G-45.\32\ The MSRB also noted that it believed 
the Commission has agreed with the MSRB that each entity must make its 
own determination about whether its activity would qualify as 
``underwriting'' activity as that term is defined in SEC Rule 15c2-
12(f)(8) under the Act.\33\ In addition, the MSRB stated that, 
beginning in 2015, the MSRB has received data from underwriters to 529 
college savings plans under Rule G-45.\34\ The MSRB stated that it has 
every reason to believe that there is widespread compliance by those 
underwriters with their reporting obligations under Rule G-45.\35\ 
Consequently, the MSRB stated, it does not believe that the requirement 
to submit fee information, as would be required under the proposed rule 
change, on MSRB Form G-45 would unduly burden competition between 
underwriters to advisor-sold ABLE programs or 529 college savings plans 
versus underwriters to direct-sold ABLE programs or 529 college savings 
plans.\36\
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    \27\ See SIFMA Letter.
    \28\ See MSRB Response Letter.
    \29\ Id.
    \30\ Id.
    \31\ Id.
    \32\ Id.
    \33\ Id.
    \34\ Id.
    \35\ Id.
    \36\ Id.
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3. Underwriter Reporting Obligation

    SIFMA stated that it believed dealers that underwrite ABLE programs 
and 529 college savings plans should only be required to submit 
information required by MSRB Form G-45 to the extent that such 
information is within their possession, custody and control.\37\ The 
MSRB stated that, under the proposed rule change, and consistent with 
the MSRB's previous position on this issue, an underwriter to an ABLE 
program or 529 college savings plan would not be required to submit 
information on MSRB Form G-45 that the underwriter neither possesses 
nor has the legal right to obtain.\38\ The MSRB also noted that the 
legal right to obtain the information for purposes of the proposed rule 
change is not affected by a voluntary relinquishment, by contract or 
otherwise, of such right.\39\ Therefore, the MSRB stated, an 
underwriter may designate an affiliate or contractor to perform 
activities in the underwriter's stead in connection with the 
underwriting, but that the underwriter would be properly viewed as 
having the legal right to obtain all information.\40\
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    \37\ See SIFMA Letter.
    \38\ See MSRB Response Letter.
    \39\ Id.
    \40\ Id.
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IV. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
the comment letter received, and the MSRB Response Letter. The 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to the MSRB.
    In particular, the proposed rule change is consistent with Sections 
15B(b)(2)(C) of the Act.\41\ Section 15B(b)(2)(C) of the Act states 
that the MSRB's rules shall be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in municipal 
securities and municipal financial products, to remove impediments to 
and perfect the mechanism of a free and open market in municipal 
securities and municipal financial products, and, in general, to 
protect investors, municipal entities, obligated persons, and the 
public interest.\42\ The Commission believes the proposed rule change 
is consistent with Section 15B(b)(2)(C) and necessary and appropriate 
to help the MSRB receive complete and reliable information about ABLE 
programs and 529 college savings plans which it can use to monitor such 
programs and plans and detect potential investor harm. The Commission 
believes that, for that data set to be complete and reliable, such data 
should include the data about the fees and expenses associated with an 
investment in an ABLE program or a 529 college savings plan that are 
included in the proposed rule change. In addition, the Commission 
believes the proposed rule change is necessary for the MSRB to gather 
relevant data required to ensure the MSRB's regulatory scheme is 
sufficient and/or to determine whether additional rulemaking is 
necessary to protect investors and the public interest.
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    \41\ 15 U.S.C. 78o-4(b)(2)(C).
    \42\ 15 U.S.C. 78o-4(b)(2)(C).
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    The Commission believes that the proposed rule change would 
facilitate the MSRB's ability to better analyze the market for ABLE 
programs and 529 college savings plans as well as improve the MSRB's 
ability to evaluate trends and differences among ABLE programs and 529 
college savings plans. Further,

[[Page 59151]]

the Commission believes that the MSRB, as well as other financial 
regulators charged with enforcing the MSRB's rules, use (or will use) 
the information submitted on MSRB Form G-45 to enhance their 
understanding of, and ability to monitor, ABLE programs and 529 college 
savings plans.
    The Commission believes that the MSRB or other regulators could use 
the information submitted on MSRB Form G-45 to, among other things, 
determine if the disclosure documents or marketing materials prepared 
or reviewed by underwriters are consistent with the data submitted to 
the MSRB for regulatory purposes.
    In approving the proposed rule change, the Commission also has 
considered the impact of the proposed rule change on efficiency, 
competition, and capital formation.\43\ The Commission does not believe 
that the proposed rule change will impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act. The 
additional data that the proposed rule change would collect is 
understood by the Commission to be readily available and known to the 
underwriters of ABLE programs and 529 college savings plans. 
Additionally, the Commission understands that these underwriters are 
already required to submit certain information to the MSRB on MSRB Form 
G-45 on a semi-annual basis. Also, the Commission believes that the 
additional information required to be submitted by the proposed rule 
change would be submitted on an equal and non-discriminatory basis, and 
the requirement would apply equally to all dealers that serve as 
underwriters to ABLE programs and/or 529 college savings plans. 
Furthermore, the Commission believes that the potential burdens created 
by the proposed rule change are to be likely outweighed by the 
benefits.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    For the reasons noted above, the Commission believes that the 
proposed rule change is consistent with the Act.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\44\ that the proposed rule change (SR-MSRB-2017-08) be, and hereby 
is, approved.
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    \44\ 15 U.S.C. 78s(b)(2).

    For the Commission, pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26909 Filed 12-13-17; 8:45 am]
 BILLING CODE 8011-01-P